How to Check a Lawyer Can Act on Your New Brunswick Business Purchase

Buying or selling a business usually involves large sums, signed agreements and money held in trust until closing. Before you hand over a retainer or a deposit, it makes sense to confirm that the person helping you is actually allowed to act.

The title "lawyer" or "notary" does not tell you everything. This article walks through what to check, the limited exceptions, and why land in the deal makes the question more pressing.

This article covers the law of New Brunswick.

Who is allowed to practise law in New Brunswick

The Law Society of New Brunswick says only practising members, insured or exempt, are entitled to practise law in the province. Non-practising, retired, suspended, disbarred and resigned members cannot practise law or handle trust funds.

That second point matters in a business deal. Trust funds are the deposit and closing money held on your behalf, so you want them held by someone who is permitted to hold them. For that reason, it is sensible to confirm that your lawyer is a practising member before you send any money.

Notary public does not mean cleared to practise

Every member of the Law Society of New Brunswick is a notary public. A member who is not a practising member may not use any notarial power that involves practising law.

So a stamp or a notary title is not proof that someone can advise you on a share purchase or asset purchase. The status that counts is practising membership.

The limited exceptions

Students-at-law may be authorized to practise in limited circumstances under the supervision of a practising lawyer acting as their principal. Lawyers from other Canadian jurisdictions who have applied for admission may sometimes practise in New Brunswick before admission, but only while qualified and insured at home.

If you are dealing with a student or a lawyer from another province, ask who is supervising or how they are authorized. A proper answer should be easy to give.

When the business owns land

A land title registration application must include a certificate of title certified by a member of the Law Society authorized to practise law. Only Law Society members with an agreement with Service New Brunswick, called subscribers, may submit electronic instruments. If the business owns land, a lawyer is therefore needed to register the transfer.

This usually comes up in an asset sale. Real Property Transfer Tax is charged when a deed is registered, so it arises if land or buildings are transferred. A share sale does not register a deed.

For deeds tendered on or after April 1, 2016, the tax is 1% of the greater of the consideration or the assessed value. Some instruments pay no tax on registration, including a lease for a term of less than twenty-five years, a deed given only to secure a debt or loan, and transfers to a registered charity or to the Crown, a Crown agency or a Crown corporation.

Corporate approval is another reason to ask early. An asset sale of a whole incorporated business needs the seller's shareholders to approve it, while a share sale is a deal between the shareholders and the buyer. Some asset transfers, such as leases of three years or less and transfers within a corporate group, are exempt from that approval.

Whether a lawyer is required for other parts of a private business purchase is a separate question. It depends on the facts, and a lawyer can confirm it for your deal.

A checklist before you hire

• Ask whether the lawyer is a practising member of the Law Society of New Brunswick, and whether they are insured or exempt.
• Confirm their status with the Law Society rather than relying on a title, letterhead or notary stamp.
• Ask who will hold deposit and closing money, and that it will be held in trust.
• If a student-at-law is helping, ask which practising lawyer supervises them.
• If the lawyer is from another province, ask how they are authorized to practise here.
• If land is involved, ask whether they are a Service New Brunswick subscriber who can file electronically.

What to do next

Check the lawyer's status before you sign a retainer or send money. Write down who is handling the file, then tell them early whether the business owns land, since that changes the closing steps.

If something does not add up, such as a vague answer about status or a request to send funds elsewhere, pause and ask the Law Society. Your lawyer can also explain how the title work fits into your timeline.

Frequently asked questions